Michael Fridjhon: What’s really going on in SA wine

The drought years have – officially at least – given the wine industry cause for pause, to take stock of itself, and its probable future. For much of the past 18 months we’ve been told that unless grape prices increase, we’ll lose so many growers that the industry itself will shrink to the point that it will no longer have critical mass. The stats are real enough: in 2001 there were 4390 of them: 15 years later their numbers were 30% less (probably fewer than 3100 at the end of last year). At the same time the national vineyard has shrunk by just over 10%, from 106 000 hectares to 95 000.

It’s easy to understand why those with old bush-vine vineyards are finding the going hardest: the yields are small, the cost of harvesting greatest, and grape prices cannot begin to compensate for the running expenses, let alone the capital value of the land. Unless the fruit is very special, and has been identified as a potential source of premium single vineyard wine, keeping it going is pretty much the same thing as trying to keep an unexceptional and battered car on the road long past its scrapping date.

Much of the focused work within industry bodies in the past couple of years has been around the viability in the agricultural side. This is hardly surprising: the body with the skills, competence and budget to do this is VinPro, an organisation whose mandate is the primary production sector. It’s also right that it should be thus: without fruit, there is no industry. It doesn’t matter how strong the brands, how well developed the logistics network, how good the technical training: no grapes, no wine.

The research into what it takes to stop the attrition amongst growers speaks of ratcheting up prices to a point where grape farming is viable. With grape prices averaging around R5 000 per tonne, yields in the Coastal Region appellations averaging less than 10 tons per hectare, and farming costs per hectare comfortably above R50k the arithmetic appears inexorable.

What these figures don’t reveal is a much more telling analysis of what is wrong with our wine industry: if growers have been bailing at the rate of one every four days (!) for the past fifteen years, if at the same time we are losing vineyard at the rate of two hectares per day over the same period, how come we haven’t arrived at a point of shortage so acute that prices are rising because supply is vanishing while demand continues to grow?

The answer is the Cape wine industry’s dirty little secret: for all this tragedy of lost growers and vanishing vineyard we are (allowing for vintage related volume variance) producing more wine than ever before. In 2001 our 106 000 hectares of vineyard yielded 977 000 tonnes of fruit. In 2016, with 30% fewer growers and over 10% less vineyard we managed to produce a whopping 1.4m tonnes (in a vintage already affected by water-shortages – in 2014 we harvested 1.52m tonnes).

This vast increase is not achieved in squeezing the grapes harder: it’s raw tonnage of fruit, and that can only be achieved through dramatically higher yields: in 2016 we were getting 50% more fruit from every hectare. Now while it doesn’t always follow that higher yields come at the expense of quality, there’s no way we can talk about “low-yielding and rare” while this is the new reality.

Lurking in all these figures is the much more damaging transformation of our industry, from one driven by premium fruit grown in prestige locations, to one of nondescript lowest common denominator wine sourced from irrigation land as far from our premium wine areas as the Australian Riverland is from the Yarra Valley. Stellenbosch represents 16% of the national vineyard but produces only 8% of the crop. The Northern Cape has 3% of the national vineyard and produces 18% of the white wine crop (white varieties account for 90% of the Northern Cape’s vineyards).

If you unpack these figures, the situation is more parlous than anyone imagined: we’ve suffered a massive loss of vineyard and a frightening attrition among grape growers. We’ve managed to compensate for this loss by bumping up yields of the most amorphous commercial grape juice. Growers in the fine wine production zones are abandoning grape farming because it isn’t viable. Growers in the high yielding irrigation lands have more than taken up the slack. As a result, for many of the more industrialised growers, business is booming. Buyers of the fruit – in other words, those who process the megatons of tasteless, flavourless juice – have no need to pay more: they’ve merely shifted their purchases to a more cost-efficient source of sugar water.

Without an incentive to pay more for grapes, the producing wholesalers can continue to apply a model which is destroying the fine wine business at an alarming rate. There is no chance that grape prices will increase – drought conditions or not – because there is no need for anyone to buy the fruit which defines the very “Capeness” of Cape wine. Accordingly – and this is because nobody cares enough – I fear it may already be too late to save the quality wine industry of the Coastal Region.

• Michael Fridjhon has over thirty-five years’ experience in the liquor industry. He is founder of Winewizard.co.za and holds various positions including: Visiting Professor of Wine Business at the University of Cape Town; founder and director of WineX – the largest consumer wine show in the Southern Hemisphere and chairman of The Old Mutual Trophy Wine Show.

15 COMMENTS

Thank you for the insights Michael. I hope that wine drinkers start voting with their wallets to support those growers and producers who make more premium wine. I for one have changed my purchasing habits and am enjoying the slightly more expensive, but far more rewarding wines as a result.

This is a common misperception amongst consumers that the price paid for a premium wine filters back to the producer, or grower. The per tonnage price for premium grapes is approximately R15000, depending on demand. If one takes the average yield of 600 litres per ton this translates to 800 bottles per ton, leading to a cost of R18.75 per bottle.
This is definitely more that R6.25 per bottle cost if only R5000 per ton is paid, but in no way reflects the price difference between low end wine and premium wine. Obviously there are numerous other costs involved in producing premium wine, but do not make the mistake that the producers are making substantially more money. To the contrary, yields are traditionally much lower in premium vineyards due to the strict vineyard management and canopy control to produce high quality fruit.

A good sobering analysis of what is going on in our industry. It once again highlights the dual nature of the SA wine industry. The majority of the commentary talks about the fine wine side but the reality is that this is currently the least profitable and smallest section of it. Not that the lower end is super profitable either.
I live and work in the Robertson region so this is the area I am most qualified to speak of. Robertson is different to most other regions in SA as both (high end and low end) exist in here. The high end does well where there are well thought out marketing strategies and routes to market. The low end works as long there are economies of scale involved.
But we are starting to see changes in the low end of the supply chain. Farmers are realising that even though water is cheap (in my opinion way too cheap, but that is an entirely different discussion) they need to start looking at what is the best/most profitable use of their water supply. With the boom of the citrus market as well as other fruits such as plums, nectarines and blueberries, farmers are moving away from wine grapes. There are also other crops that farmers are looking at such as avocados and low chill cherries. The average profit per hectare in Robertson for wine grapes in the past year (which is the best for years) was R25 000. On citrus profits of over R300 000 per hectare are fairly common.
This all points to the fact that economics will resolve the issue. The high yielding vineyards will decrease in the irrigation areas. They will not disappear, but the best and most high yielding soils will move to other crops. Wine grapes will be consigned to the more marginal soils (as they have always been).
The high end wine industry can and will survive if there are good marketing strategies involved. The wine industry has always been cyclical. It is heading for or nearing the bottom of the slump, but will in time recover.

We have enough xenophobia about immigrants, let’s not introduce it to wine, Kevin. Many of the popular retailer wine tastings (usually blind) compare local and international wines, with the locals often powering through to the top. What better encouragement to get consumers to drink local (as well as international).

Yes, I must say there’s zero chance of me ever only drinking SA wine. You cannot educate yourself if you don’t taste from all over the world. How can you say a South African wine is world class (or even good) if you don’t know what wine from other countries taste like? I say drink more foreign wine so your expectations from local winemakers can be higher.

Surely, the issue is with how the industry cooperates to promote, inform and educate? I see a mixture of the problems faced by Champagne (the real stuff) and Scotch Whisky, both of which have triumphed over adversity.
Champagne is, on the whole, made from high yield, average quality fruit. Most fruit is grown by growers and sold to the houses who will blend and age wines into something great. They do what they do very well and cooperate to promote high quality that instils the value of Champagne in customers as an entire region. Nobody questions the price, ever!
Scotch Whisky is the other side of the same coin. Inexpensive blended whisky is a combination of cheap, high volume grain whisky that’s been topped up with a ‘wee dram’ of good malt to make it taste good. There’s nothing wrong with it, its just significantly cheaper than a single malt that’s been aged for years or even decades. They both have a place in the market, they are both whisky and they are both good in their own right.
Both of these scenarios apply to the wine trade and markedly so in South Africa. There is a trend for buying inexpensive, high yield fruit or base wine and blending it with a splash of good stuff, with concentrated flavours and complexity, to create a wine that’s greater than the sum of its parts. There is nothing wrong with this, apart from being confusing for customers, except it means marketing low yield single vineyard wines becomes more of a challenge when creating differential. So what’s the solution? My answer to that is territorial marketing. Champagne works very hard as a whole region to promote their sparkling wines as a luxury product worthy of the price tag. Whisky has done much to create differential between the cheaper alcoholic beverage and the highly prized luxury single malts.
How could this relate to South Africa? The wine regions of note need work together to protect their reputation more at the same time as working harder to promote their value as a region. Having individual wine brands that undermine this strategy or devalue the region should be excluded from the venture. For fear of sounding like I’m beating the same drum, education is key. Not just for consumers but for those that engage with them. Having ill informed tasting room ambassadors who are unable to explain the benefits of low yield or ‘terroir’ might end up doing a disservice to any winemaker that puts their heart and soul into their wine. On global level, South African wine is on the crest of an exciting wave, to fully capitalise on this success means everyone now needs to step up to the mark.

Unfortunately Michael is missing one enormous point. The people that dictate what wine is consumed at what price point, is the comsumer, not the grower of the vines. This is why the large retailers are able to dictate prices, like they do with milk and bread and so forth. If Michael argues that the grape/wine prices must be increased simply because it is grown in the “coastal region” he is out of touch with the reality of the industry and the spending and wins consuming patterns of the South African wine drinking consumer. I’ve been working in the Industry in the Northern Cape and for the past 11 years that I am involved I am not aware that Michael once visited the Northern Cape, so his remarks on the quality of wine from the region are a bit misplaced. The domain of good quality wine in South Africa can not be reserved for Stellenbosch and surrounds…that view is, with respect, a bit 70’s.

Hi, Eduard. Firstly, don’t knock the 70’s. ;-) Secondly, I’m with Michael on this one, but I will be mightily happy to have any of my ignorance corrected. Aside from the wines of one or two very good producers like Lowerland, I am not aware of any (never mind the sheer amount that would be required to challenge the Western Cape as SA’s fine wine domain) significant fine wines originating from the Northern Cape. The sort that would put it on par with the best wines from Stellenbosch, Constantia, Hemel & Aarde, Elgin, Franschhoek, Swartland, etc. I am only aware of the odd smaller/single vineyard bottlings that are not too bad, but one hardly ever see them or hear about them (in Gauteng, at least). I have also not seen such wines appear with any significant presence in panel tastings or foreign/local wine journalism or reputable competitions (which excludes the General Smuts Trophy – talk about being stuck in the 70’s). I suspect you are merely trying to defend your region, which is fine, but if there is actually any substance to this thing about the Northern Cape seriously challenging the Western Cape for fine wine dominance, I want to know about those actual wines (it’ll need to be a very long list), please? I’m a consumer and I don’t want to miss out on any of the best wines in the country!

Hi Kwispedoor. I am not defending any region, I am also not downing any region. I am merely trying to make the point that the South African consumer determines what wines are consumed at certain price points. It is a matter of supply and demand, not origin. That is exactly why imported wines from all over the world have market share in South Africa. With regard to quality, all regions have a roll to play with varied cultivars…therefor rightly challenging the historic wine producing areas. The fact that yields have increased over the past 10 years is very well explained by one of the other respondents here, so I will not elaborate further. With regard to the Northern Cape (since it was brought up), here are few (of the more thann 40) 2018 awards from the region:
Top 100 SA National Wine Challenge: Lyra Vega 2016 ( Double Platinum Top 100 wine) = Red
: Lyra Vega 2015 (Double Gold) = Red
Michaelangelo International Wine Awards 2018
: Straw Wine 2017 (Double Gold)
: Columbard 2018 (Gold)
: Sauvignon Blanc 2018 (Gold)
Veritas 2018
: Columbard 2018 (Double Gold)
: Sauvignon Blanc 2018 (Double Gold)
Muscat du Monde France 2018 : Red Muscadel 2017 (Gold and international top 10 award…in other words one of the top 10 international Muscadels)
The list goes on…more than 40 awards were won by our Region and I will gladly supply a full list if required. If/when you visit our province (the Douglas or Upington area), please call on any of the cellars and you will be met by graet people, making and drinking good wines…for that matter…add the Namaqua Coastal region to your visit. These regions proudly contribute to the South African wine offering. Best regards.

Thanks, Eduard. A producer like Spier or Nederburg probably racks up 40 awards by themselves in a year. So unfortunately, 40 awards (many for sweet wines) of random reputation – for instance, I personally don’t even take any notice of the Michelangelo awards – over a year is not nearly enough to challenge the Western Cape as the domain of good quality wine in South Africa (your words: “The domain of good quality wine in South Africa can not be reserved for Stellenbosch and surrounds…that view is, with respect, a bit 70’s.”) I’m just categorically contending that the Western Cape (Stellenbosch and surrounds) is still emphatically the domain of good quality wine in South Africa (in the 1970’s, 1980’s, 1730’s, 1860’s, 2000’s, right now – take your pick) and the Northern Cape, Free State, Kwazulu-Natal and all the rest can’t even nearly compete. Even though there are of course nice wines to be found outside of the Western Cape. Again, I’m not disputing for a second that there are some nice wines coming out of the Northern Cape – and most at very good prices – but let’s not claim to shift the DOMAIN of SA’s best fine wine away from the Western Cape just yet. Thanks for the reminder of the Lyra Vega 2015 and 2016. I guess it is worth closer inspection – where in Gauteng is it for sale? I tried to take a closer look on your website, but I could only find details of the 2014 vintage there (with some strange analysis figures, like “11-14% ALC”)…

The truth of the statistics notwithstanding, I’m afraid there is more devil in the details than the numbers alone can provide. There has been a large and widespread step change in both “our” understanding of South African viticulture as well as “our” application of vineyard practices over the last 10 years. Without getting overly technical, much work has been done on better understanding various balances in the vineyards and their impacts on the resultant wine quality. Wine style or product specific farming has become the norm as opposed to the strategy of general production that so dominated previously.

Much of the yield increases (including in particular in the coastal regions) have come about because of these understandings changing many factors including trellis system choices, irrigation strategies, light management and ripening determination/dynamics.
This is something our industry and our researchers should be proud of and be celebrated for. Certainly not a “dirty secret” nor any cause for shame. It is common cause that as time progresses and new research or knowledge is uncovered that this should both inform our decisions and application of our resources. Growth is a good thing, particularly when it is happening between the ears.
I am in support of the sentiments and fears laid out in the piece above but do challenge some of the conclusions drawn.
Much of the yield increases i see and work with are resulting in improved wine quality. it is important that we reason in principles of viticulture rather than absolutes drawn from mythology. In a given vineyard of Cabernet Sauvignon in Stellenbosch 5 tons per hectare can make exponentially poorer quality wine than 10 tons per hectare.